There’s another good reason to tie benefits to the number of children rather than the level of income. The federal program commonly known as welfare, which provided money to lower-income mothers until it was effectively shut down in the 1990s, was criticized for discouraging work by tying benefits to income. Earn more, get less. The Biden plan avoids this trap.
The main problem with the Biden plan is that it would last for only one year.
The one-year benefit is a political gambit. The Biden plan has not attracted any Republican support in the narrowly divided Senate, so Democrats can pass it only through the process known as reconciliation, which allows some fiscal measures to pass by a simple majority, subject to strict cost limits. Democrats hope that a taste of the new benefit will rouse public support for a permanent program.
It would be better to borrow a few pages from an alternative plan introduced by Senator Mitt Romney, the Utah Republican.
Mr. Romney is proposing a permanent benefit along with a package of tax increases and spending cuts to pay for it. Analysts estimate that the cuts in existing spending programs would exceed the value of the new benefits for some families, but it would be straightforward to substitute other sources of revenue. The key point is that Democrats can pass a permanent change now by doing the hard but necessary work of figuring out how to pay for it.
Mr. Romney’s plan has another advantage that Democrats ought to incorporate, too.
The federal government currently allows parents to reduce their federal income tax payments by up to $2,000 per child. In some cases, lower-income households that owe less than $2,000 in taxes can instead receive a portion of the benefit in the form of a direct payment.
The Biden administration has proposed to increase the benefit to a minimum of $3,000 per child, and to make it fully refundable, meaning that lower-income families would receive in cash any portion of the benefit that they did not use to reduce their income tax obligation.
Crucially, under the version of the plan passed by the House Ways and Means Committee this month, the government would distribute the money in monthly chunks.